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June 12, 2021 8:30 am
Hans and Robby discuss Hybrid Long Term Care.
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Thanks for listening and thanks for choosing the truth podcast network. This is the Truth Network welcome to finishing well brought to you by Cardinal guy, certified financial planner Lonza Schild, best-selling author and financial planner helping families finish well for over 40 years of finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes. Now let's get started with finishing well, finishing well is a general discussion and education of the issues facing retirees guide.com are no advisors upon Schild CFP some insurance this show does not offer investment products or investment advice welcome to finishing well, a certified financial planner Hans Schild today show is hybrid, which is kind of a new word from word if you're in the car business hybrid long-term care and so as we talk about hybrid long-term care. One of the first things that came to my mind as I is I thought about this show was what Jesus told us over and over again in the Gospels incessantly. Chapter 9 I think Matthew 17 and injured and be familiar this little bit but he says did not yourself.
Take up your cross and follow me. While that word deny yourself this is is a fascinating thing when it comes to that concept of finishing well is to finish well right I have to deny that I have the ability to get myself into heaven.
It was Jesus's death on the cross in order for me to be able to do that on a finish well and interestingly got a deny to some extent my own ability to completely care for myself through the end of my life, just like I didn't have the ability when I was born to feed myself or to take care of myself. I need to go the bathroom.
I can think all you know it is we come into this day drive.
Are we really planning for this concept of denying ourselves that hey, I'm in a need forces outside of my own ability in order to feed myself as I come into the end, whatever that may be now. It could be that obviously I get a car accident and I'm not disclosing admitted for most of us working with Morgan to come out of this world likely went into this world and is slow in a steady kind of thing were at some point in time Hans were were not able to treat ourselves take ourselves to the bathroom at night, which absolutely right, and it really did the issue were getting ready to play some real head stuff on you and talk about this hybrid long-term care throw some facts and figures and what I did in preparation for the show I sent before we get into that stuff and go to logic. We really need to get to the heart of the issue here, because all that logic is not can it do any good unless you the listener are in a point or in a place where you're saying yeah I got a problem and I'm I want to look for a solution and then were talking about the solution, but that doesn't do any good until you've accepted and you recognize the problem, so I want to thank you for really coming up with the connection here in Scripture the end that was read which you did Robbie and it's just it's fantastic. It's had an impact on me this morning, aesthetic impact on me.
You know, obviously only shows an end. As we discussed this topic but yes often I want to be independent and take care myself and including my own salvation in know our network think that this didn't what God had in mind is at some point time we have to trust God and you know part of what we we did was return on this radio show today because were looking at finishing well. We want to do that with God and and we want to pray about these things and say let's let's take a really hard not denying Christ but denying ourselves and saying what what would this look look like to finish well through that actual in a stage of my life and and from my standpoint when I first heard about this idea of a hybrid long-term care.
I was like man you know this is really really some neat stuff that just happened as I found out from throughout the attacks on change what you have, the pension protection act, which became law along about 2006 2007.
It really wasn't about this. It was about's making your pension safer within a little piece of it. There was just kind of thrown in there.
They said were not allow life insurance and annuity policies were not allow money to come out of those before death to the person that owns the policy restraint simplify this work and allow for long-term care payments, so if you need home healthcare and you do it all properly. You can take money out of one of these hybrid life long-term care policies or hybrid long-term care annuity policies didn't matter could be either one where you've had tax-free or tax-deferred growth inside of the policy which life insurance policies tend to do that and you can pull money out of them before you die before they were gonna pay off. Otherwise, to pay for long-term care and so that's kind of an oversimplification, and so the IRS and the tax code and really Congress passing this 14 years ago they created these. They said this is going to be a tax-free event so you can get the money out to pay for care and literally never pay taxes right richly the you know I think about my own head on this issue five years ago was a summit asked me Robbie you know what happens with your life if you if you get to the point where you no longer capable of of going to the bathroom or you know those feeding yourself of those kind of things and I would've told you. I know I would've told all Medicare pays for that but but the government knew when they made this tax know that no Medicare doesn't necessarily pay for that and that their stipulations to that end, and for many of my friends as I watched them into that transition.
It didn't pay for that which left them in a really difficult place and so it's fascinating to me that the government behind the scenes. Unbeknownst to me, is aware of this need and so they put some tax stuff and the place in order to help you know people to in a meet that need.
Yeah, I mean, this thing passed overwhelmingly years ago and this was part of it. It may have even been put into the bill just of the overall bill got past because there's very few congresspeople and voting on staff that one of vote against helping people that are in need of long-term care so regardless, it's it it's a tax benefit that's there. You have to have the money to buy the stuff in the first place.
So which many of our listeners do and you really need to buy this in advance of when he actually needed mean this isn't something you can buy at 87 and start using it 89 yet I don't want you folks in your 70s and even your early 80s to say lots. I'm too old for that. Now you not because we have things we can do in the late 70s and 80s with these kind of products to help you out and help you prepare even if you got some health conditions but want to stay at the core issue here is a core issue is this is just one way to protect yourself and we are experts on all of the available policies and how they were and which ones are appropriate for which people you know I've made myself an expert on this and then along with my staff and folks that we all work together we study this stuff. We talked all these companies we think about it we pray about and we pray will work with the people with thick incoming clients and just over the topic that you just went over. This is the core issue that we need to hit people with is you know, do you think you need this stuff that's really the question because you not over the years I've been a little afraid to ask that question because most people are going to just come out with think I needed her.
I don't think I can afford it.
My kids are going to take care of me or something I meant to get a get a gun and shoot myself for now. It's interesting to me because his wife processed it the more I realize this is really truly denying myself, but that absolutely is and all that stuff and all those what we would call in the sales business objections are all kind of self protection where where they're trying to date there in denial about it in there trying to protect themselves with logic of saying you know I don't need it. I don't want and I want to talk about it. And so what I've done through my whole career, but I haven't done this recently is I've got all kinds of answers for all those things you know and that also what people are trying to avoid who wants to go through that again. So before we get into really talking about what this is, which will do in the second part of the show will get into the logic part. I really just need to asked you that question. Do you do you think you need this. Do you are you in denial about the fact that you might need it most likely will need it.
The you know and are you prepared to do something about, and you know I don't need a yes on all areas but I just need a little bit of discussion about and I really like to open up your minds in your hearts right now before I get into the logic on the core issue is this something that I really need to prepare for the younger you are the better. I just had a couple of people this week that were into me. They listen to the show there down the Charlotte area.
I met with them in our office down there and they know the gases are. Are we a little too young to be doing all this stuff and the answer is no mean there were 58 and 57 and I said you know we maybe shouldn't do a financial plan yet and were in charge for all at but this is a perfect time to address long-term care and address life insurance for John great health and the stuff is less expensive than the younger you are, the less cost. So there's a whole lot of benefits of looking at this at a younger age. At the same time. If you just denied it and avoided it in your in an older age, now you're really taken it seriously, then that's fine. Don't don't rule yourself out on that I'm too old for that. I'm too sick for that. Just tune in and the second part of the show And and a big part of this was that I needed from me personally came to the realization based on stage life. I was in and taking current of my parents and Tammy's parents as they aged out like man I do not want to put my kids in the position that I've been put in and then my parents didn't do it. You know with any understanding of like all my goodness, it would be so so much better dip to be able to meet my my parents needs with professional care. Them based on where we fallen back to and and be able to be the one that was visiting them and helping them in whatever and so part of the denial for me was that I wanted to deny myself of anything and make sure that my kids had something that they could relate mean of think through in this in this process. So again when we got all the stuff, at the end of the show were really talking about how to how the stuff actually works is to be great, but may want to tell you that today show is you know obviously on long-term care, which is one of the seven worries there in the Cardinal and Hans's book the complete cardinal guide to planning for living retirement. It's all firstname.lastname@example.org in verse he would love to hear from you anytime an email Hans with Cindy on the entire book. Whatever it is she mean he would love to hear from you. Cardinal guide.com. Be right back. Hans and I would love to take our show on the road to your church, Sunday school, Christian or civic group. Here's a chance for you to advance the kingdom through financial resources and leveraging Hans expertise and qualified charitable contributions veterans aid and attendance IRA Social Security care and long-term care. Just go to Cardinal guide.com and contact Tom to schedule a live recording of finishing well, your church, Sunday school or civic contact on the Cardinal guy.com that's Cardinal guide.com welcome back to finishing well with today show hybrid long-term care and on.
On that note, Hans. Let the world's hybrid long-term and a hybrid is two things put together to make one and set usually some better yet, something better, but that that's exactly right. There's a result that's after and so this is really the addition of a long-term care benefit to a life insurance policy towards taking a long-term care policy and marrying it with a life insurance policy and then the result is as you have a policy that is going to pay a large amount when you die just like any other life insurance policy does to your beneficiaries tax-free vent away that life insurance benefits are typically tax-free to the beneficiaries and then see yet that and that's in every life insurance policy within the long-term care part is you have the ability to take the death benefit early by the month. If you need long-term care so you know when they first came out with these. The sales pitch was live dire quit is what went with supper that I never really liked those terms a lot, but I actually use. I guess I'm using it today so so the live part means that if you live a long time. You're going to be very happy you bought this because if you live a long time. You're probably getting use long-term care part of it and if you don't use up all the life insurance part before you die. Then your beneficiaries are still going to get what's left of the life insurance but the whole thing around live is you can be real happy about it because you probably can use long-term care if you live long time. The die part is that your heirs are going to get more money out of this thing than you paid into it substantially more money like any life insurance policy.
So if you die, you can be glad to have this in your preparing for that and then the quick portion just means that if you decide you want this money back is sometimes you can get all of it, but you can get most of it.
You can you can just call the insurance company. Sam ready to quit. I want my money back.
And so it it has that alternative. I have never had a client of miscellany since 2007 2008. I have never had a client call me even call me up and inquire about your that quick part. You know I put that money over here and I move that hundred thousand dollars over here. Get this long-term care and now I think I want to back. I really think that that provision is put in there by the insurance company is really just a sales tactic or of buyers remorse tactic or note to sell you on the fact that you can move and do this is a make a bad because it just say and look if you want to get out of this deal five years from now. You need this money for some Algerians come get nobody ever does, who's going to cancel their long-term care insurance is to get the money back now, or their life insurance. If you know again when he got back on the deal and in the beauty of it is is you don't know if if you're gonna die quickly after some short illness or if you can. If it's get it's going to go on for for five years or whatever the situation is in here you prepared for it it in in a couple different ways and to an extent with a decent investment that he and you know I hear there's the thing you really need to buy 200,200 50,000 $300,000 of life insurance to make these things worthwhile. Says it's a fairly large life insurance policy, a retired person and a person in their 60s, 70s, 80s that's the first thing then they have extension right so that if you actually need care need long-term care part in use up all the life insurance, then you have a benefit on there that he keeps on paying long-term care for several years beyond their is some pretty smart people to design these things, and that's all coming out of the original money that you're putting in so these things have a large unit of down payment or a large transfer of wealth, because you're not really spending the money when you kinda hard to give it to the insurance company and you're never going to ask it back into the need long-term care.
Die. But the money is thereunder is still in your name you just taking it from the bank of the stock brokerage of the IRA you're just moving it to the insurance company and so is this it was in one place.
Now it's in a new place and then all these things start happening with another piece of that is they've fixed these are the people that are in their 50s and 60s can they don't have to pay a large initial deposit they can pay this like over 10 years or 12 years.
If that initial deposit was 100 hundred 20,000 you know they can pay over 10 years. We can write these for people and put substantial benefits, especially for one person with 50,000 or with in a $5000 a year for 10 years, but the way most people buy them as they make a large initial deposit and is usually their savings is usually their money that they have put back just in case that they're not really spending are using now and so people tend to buy these things with a large and is the son deposit. You can even use your IRA money and got a way to do that you won't get taxed all at once, so I want to get into too much details.
This was made possible by the pension protection act and then all the insurance companies created. We have 15 to 20 different insurance companies that offer these types of hybrid long-term care life insurance policies and then within those companies they have for five flavors of the thing.
CE is you can imagine there's a whole range of options, depending upon how people want to finance where the money was to come with her and spread it over time. Whether they want to make an initial deposit so is there a difference in the animal desk justice somebody doesn't know long-term care can mean a lot of different things. So from a standpoint of the long-term care is there different flavors of that meaning like how you get the care what care you get right yeah I mean so, so all of these policy. I don't sell unless they pay for home healthcare and outselling. There are a few versions where they only pay a facility who wants that because now the sender collect on your insurance yet go to the assisted living when least amount personal situation that's can be the last resort for me. I'm I'm I'm using home healthcare right and so most of the policies and all of the policies that I still pay both ways with her to pay for home health, which is a pretty wide range of subjects are how you can get that covered mean how you can get that delivered and then they pay for assisted living, which is the most desirable form of institutional long-term care is law. These assisted living is really don't look like a nursing home and they're really not. They look more like an apartment than a bunch of elder people live and but there's people to come around and deliver the necessary care then they will also pay in a nursing home and they'll pay for adult daycare and about anything else you'll dream up in order to get streamed up in the future when they're doing the stuff with iPads and artificial intelligence and the other person still has to come over and care for you, but they can interact on video and cannot watch you and have you check and self which brings down the cost of the thing right in and then there's the other issue of what turns it on right because an no was some long-term care plans you you got where you you can't feed yourself, you can't do this you can't do that are are those variable as well. Well that's an issue that just about everybody brings up with their look at okay yeah and they bring it up many times from a negative standpoint as they read what I've read about all these policies and then you know the insurance companies is going to give you a hard time about collecting there to basically say you're not second or you have to demonstrate so I think what you're asking is, as most of them have the test, which is the six activities of daily living, bathing, dressing, eating, transferring, toileting and consonant content to get six activities of daily living, and you need to show the insurance company that you can't perform two of them are more without human assistance, and I'm entailed.
We help our clients file the claims that I'm telling you that the soft spot here is bathing and dressing so when most people are ready to file a claim.
What I do is educate the care coordinators look.
We need to write out and I don't need you to put anything that's untrue, but you know Myrtle here has this policy and there in a pay you to give the care and as long as you can put down and say this honestly that she needs help getting dressed, which covers a lot of ground and she needs help taken a bath, even if that health help is just, Gartner in there and Gartner washed off and getting close laid out so she doesn't put the summer with Alzheimer's. The nearly put on things that don't mansion that that type of thing. So if you get to the six those are the two soft spots the end that's going to allow claim payment as this can open up a claim.
Now the other side of that is a cognitive impairment so there's many people that have dementia who can perform many of those six activities are all of them but yet they need to be watched visiting us at the house on fire or something, so the six activities get thrown out and they just you going to the cognitive impairments or just need a doctor to certify that they've got a significant cognitive impairment to where they need to be watched, that opens up the floodgates for the policy right and see it again as of some I'm sure your listing is thinking while I don't want just by this from somebody who seems to be selling all kinds of insurance that this is good to me is where you really blessed to have Hans somebody that he deals with the stuff every day he understands what these policies are saying and how to move within this system so you know yeah firstly at his side. Do we need this.
Do we want to deny that we can take care of ourselves clearly, and of life. It's not easy to do but yes probably true and and then once we do it we got it discern God put somebody in my life right that's going to be able to help me get stuffed that it is effective on for my family for my for the people and leave behind.
Also that that that you know and turn it on what needs to be turned on and so you know again that's why want to remind you that this shows being brought to you by Cardinal guy's. He does put guide after the Cardinal cargo guide.com a correspondence book, the complete cardinal guide to planning for living retirement is so much like the Bible on how to finish well in this structure okay as far as Neil making financial decisions is as you reach this party life and so again Cardinal guy.com Hans we ran out of time before Ramada show once again. Okay thank you finishing well is a general discussion and education of the issues facing retirees cardinal guide.com Cardinal advisors and Hans Schild, CFP some insurance this show does not offer investment products more investment advice. We hope you enjoyed finishing well brought you by Cardinal guy.com visit Cardinal.com for free downloads of the show previous shows on topics such as Social Security, Medicare and IRAs, long-term care and life insurance, investments and taxes as well as constant best-selling book, the complete cardinal guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows to get Hans book go to Cardinal guy.com if you have a question, comment or suggestion for future shows. Click on the finishing well radio show on the website and send us a word. Once again, that's cardinal guide.com Cardinal guy.com. This is the Truth Network